Empowering Progress: Education, innovations and financial development in the battle against energy poverty

Abstract

Energy poverty affects numerous policy areas, such as health care, inequality and employment. So, it is considered multidimensional and is not easily determined by a single factor. As such, the study constructs a composite index of energy poverty (EPI), engaging multiple indicators based on their logical relevance from the literature. Adopting EPI as the dependent variable, the study discovers the theoretical links between various factors of education, financial development, and technological innovations in EPI between 2000 & 2018 for a global panel of 77 countries. To this end, robust econometric estimators “Continuously Updated and Fully Modified (CupFM) and Continuously Updated and Bias Corrected (CupBC)”, along with the Generalized Method of Moment (GMM), are applied. The estimates imply that education in all its forms is conducive to reducing energy poverty. In line with education, technological innovations and economic growth are explored to be the drivers of reducing energy poverty in these countries. However, financial development and infant mortality increase energy poverty. A feedback hypothesis is explored between technological innovations, financial development and infant mortality, whereas education forms a one-way causal link with energy poverty. These results implicate to support of energy education programs and authenticate financial incentives and rebates on taxes given to those who develop low-carbon technologies.